California Apparel News

Los Angeles–based SweatX, the casual clothing company that promoted itself as a socially conscious business by paying its workers a “living wage” and benefits, has closed.

Overspending and a lack of sales are a couple reasons SweatX cited for its closure, according to sources close to the company.

In 2002, SweatX laid off Bob Meisner, merchandising director, and Scott Reed, community affairs director. In February 2003, the company relieved Doug Waterman, president and chief financial officer, of his duties. Last September, SweatX laid off 20 employees in an effort to pare back its expenses. Two weeks ago, the company released its remaining workforce, about 30 workers.

“It is definitely unfortunate in what happened in this case,” said Kimi Lee, director of the Garment Worker Center, which fights sweatshop conditions in Los Angeles.

SweatX was not alone in its endeavors. The company’s pitch was similar to that of American Apparel LLC, a downtown Los Angeles apparel firm started in 1997 which promotes its T-shirts and underwear as sweatshop- free clothing.

Lee noted that American Apparel has been able to carve out an apparel niche to make it successful. “Everyone for decades thought Tshirts were frumpy and big and theirs are stylish and have taken off,” she said.

Indeed, American Apparel is expanding. The company recently added an additional 500,000 square feet adjacent to its headquarters in Los Angeles’ Produce District.

SweatX was launched in September 2001 as a subsidiary of TeamX Inc. The company received financial backing from the Hot Fudge Social Venture Fund—a $5 million fund set up by Ben Cohen, co-founder of Ben & Jerry’s Homemade Inc.

About $3 million was allocated to SweatX for a three-year period. “By that time, SweatX’s business should have been able to support itself,” said Manou Vaezi, who served as the company’s chief operating officer and president before resigning on April 19.

SweatX endeavored to raise consumer awareness of working conditions in the Los Angeles garment industry and set an example for skeptics who did not believe the apparel industry could pay a living wage and still earn a profit. SweatX paid its workers— mostly Latinos—an average of $8.50 an hour and offered health benefits, a pension fund and profit-sharing opportunities.

The company also established a multiyear contract with the Union of Needletrades, Industrial and Textile Employees.SweatX hoped to gain support from anti-sweatshop activists on campuses across the country, Vaezi said, adding that the marketing efforts had little effect on the company’s sales revenues.

Vaezi said sales were $1.1 million for the first year and then dipped to $1 million in 2003. The company averaged almost $200,000 in sales each month but needed to earn $300,000 per month to break even, he said. During that time, SweatX spent more than $800,000 on marketing and management costs, he added.

Vaezi served as the chief of operations at American Apparel before joining TeamX three years ago. Last month, he returned to American Apparel, where he now serves as the assistant to the company’s senior partner, Dov Charney.

American Apparel purchased SweatX’s office and sewing equipment, according to Vaezi, who said American Apparel has sewing jobs available for the laid-off workers. —Claudia Figueroa